Growth in reuse sparks keen investor interest
Investor confidence in remanufacturing and recommerce is growing sharply as the cost of energy and raw materials continues to rise, a report has found.
According to the London Environmental Investment Forum (LEIF) study, both sectors are emerging as an attractive investment opportunity as their growth prospects and environmental benefits become apparent.
Innovation in these two markets is being found in value-added business models, more efficient processes and technologies and in the identification of new product categories and markets. In particular, ICT and renewables are showing promise as future high growth product groups.
Venture capital activity has been highlighted recently with Zurich-based Mountain Cleantech's investment in German recommerce firm reBuy, and the $35m KPCB-led investment in US eRecyclingcorp, which recovers, refurbishes and resells mobile phones.
Remanufacturing currently contributes around £5bn a year to the UK economy, has created more than 500,000 jobs and saves around 270,000 tonnes of materials every year. Recommerce or 'reverse commerce' refers to the recovery and reuse of products, often captured through internet-based platforms.
One contributor to the report was Oakdene Hollins, a UK research and consultancy firm which runs the UK Centre for Remanufacturing and Reuse. Its director of sustainable innovation Nick Morley said that investors were starting to realise the "superior" benefits of reuse as a means of reducing waste and carbon.
"The environmental benefits of product reuse usually exceed those of materials recycling and this is leading on to minimum reuse targets being built into policy instruments," he explained.
He added: "Furthermore the impact of recession on remanufacturing and reuse is broadly positive once the overall reduction in business activity has been allowed for."
Meanwhile LEIF chairman Tom Whitehouse said the challenge for investors will be to "uncover the innovative smaller independents with disruptive technologies and business models that are required higher up the food